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Taxation crippling Ghana travel industry – Leaders

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abta-panel-discussionLeaders in the travel industry have said government’s imposition of taxes has resulted in drastic reduction in business travel and domestic tourism.

Speaking on Wednesday at an industry forum in Accra organized by the African Business Travel Association, most industry leaders present said the value added tax (VAT) and the rising cost of business travel is now pushing the patronage of economy tickets, road travel, and where applicable, remote conferencing.

Mrs Katherine-Loїs Woode, Chief Commercial Officer of Africa World Airlines said airlines were the worst in the aviation industry, spending more than $90 to operate out of every $100 dollars raked in.

The earlier suspension of operations in Ghana by airlines such as Brussels and United, and the statistics of airlines that had come in and gone out of Ghana, she said, were testament to the rising cost of operations, resulting from taxation.

“Operating costs are pretty high. You have probably 79 or 81 Cents per aviation jet fuel litre. In Lagos it is 56 Cents. The short answer is taxes,” she said.

Mrs Woode noted that while travel is a luxury, the same could not be said of domestic travel.

“If a family of five is travelling from Accra to Kumasi and it is going to cost an extra GH¢1000 because of VAT (Value Added Tax), they will go by road,” she said.

Mrs Woode also lamented that while the cost of keeping compliance and safety records was high, locally registered airlines have to pay import duties on equipment and spare parts for locally registered aircraft whereas foreign ones do not.

Mr Johnnie Moreaux of Graceland Travel and Tours also noted that the trend in the business community now is to intensively compare travel costs among available travel agencies and to select an elite few in the upper levels of management whenever training opportunities that require travel arise.

He expressed worry with the lack of consultation with industry players on production costs and likely effects of tax by authorities such as the Ministry of Finance, Ghana Revenue Authority and the relevant parliamentary committees.

The industry, according to Mr Edem Baeta of Expertravel and Tours Ltd (HRG Ghana), is meanwhile struggling to explain costs and their cause to customers, and caught in the contemplation of whether to pass the costs to customers.

By Emmanuel Odonkor

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